Chapter 13: Trade structure and trade costs: what makes sub-Saharan Africa different?
Economic theory and empirical evidence lend support to the view that openness to trade advances economic growth and hence reduces poverty (see Chapter 2 in this volume). The neoclassical approach explains the gains from trade liberalization by comparative advantage, in the form of resource endowments (as in the Heckscher–Ohlin model), or differences in technology (the Ricardian model). Endogenous growth theory shows that trade openness positively affects per capita income and growth through inter alia diffusion of knowledge and technology, innovation or direct foreign investment and increasing the size of the market to allow for economies of scale. At least since the late 1970s, developing countries were encouraged to pursue export-led growth and trade liberalization policies to allow them to exploit their comparative advantage. Asian countries that pursued outward oriented strategies and export-led growth in the 1960s and 1970s have achieved rapid growth rates and economic development. Most African and Latin American countries that initially followed import substitution strategies have implemented trade liberalization and export-led growth policies since the 1980s, but in general continue to lag behind East Asian rates of growth (Latin America has tended to perform better than Africa).
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.